Citi On Etsy: Looks Like Ashton Kutcher Bought More Than A $100 Ring

Etsy Inc ETSY reported its results ahead of the consensus, and raised its full-year guidance. Citi’s Mark Kelley maintained a Buy/High Risk rating on the company, while raising the price target from $14 to $16.

Etsy reported its revenues at $85.3M, higher than the consensus expectation of $80.6M and adjusted EBITDA at $14M, almost double of the estimate of $7.2M. Marketplace revenue growth was 21 percent y/y, better than the Citi estimate of 18 percent y/y, while Seller Services growth of 59 percent y/y was also ahead of the 54 percent y/y expectation.

Etsy raised its full-year guidance for GMS from 15 percent to 15-17 percent y/y growth and for y/y revenue growth from 20-25 percent to 25-28 percent. The company maintained its GM outlook at 64-65 percent, while raising its adjusted EBITDA margin projection from 10-11 percent to 13-14 percent.

Adding Value

“Both international and domestic GMS growth reaccelerated in the quarter and topline growth remained stable, as did consolidated take rates,” analyst Mark Kelley wrote. He added that the company continues to enhance its Seller Services products, which are likely to continue to attract new sellers “to these additive products,” and that the segment is “core to the take rate expansion story.”

Kelley raised the revenue and adjusted EBITDA estimates for 2016 from $365M to $369M and from $43M to $49M, respectively. The revenue and adjusted EBITDA estimates for 2017 have been raised from $453M to $461M and from $55M to $56M, respectively.

The analyst expects consensus estimates to be revised higher through the rest of the year. He added that valuation for the ecommerce or marketplaces group had expanded.

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